Answered

The following table shows the assets and liabilities of the Chang family in 2007 and 2008.
\begin{tabular}{|l|l|}
\hline 2007 & 2008 \\
\hline home valued at [tex]$\$[/tex] 315,000[tex]$ & home valued at $[/tex]\[tex]$ 325,000$[/tex] \\
\hline mortgage of [tex]$\$[/tex] 265,000[tex]$ & mortgage of $[/tex]\[tex]$ 240,000$[/tex] \\
\hline car valued at [tex]$\$[/tex] 10,000[tex]$ & car valued at $[/tex]\[tex]$ 6,000$[/tex] \\
\hline car loan of [tex]$\$[/tex] 5,000[tex]$ & car loan of $[/tex]\[tex]$ 1,000$[/tex] \\
\hline savings of [tex]$\$[/tex] 2,000[tex]$ & credit card debt of $[/tex]\[tex]$ 1,500$[/tex] \\
\hline
\end{tabular}

Based on the table, which of the following is true?

A. From 2007 to 2008, both assets and liabilities decreased.
B. From 2007 to 2008, both assets and liabilities increased.
C. From 2007 to 2008, assets decreased and liabilities increased.
D. From 2007 to 2008, assets increased and liabilities decreased.



Answer :

Let us examine the assets of the Chang family in 2007 and 2008.

### Assets in 2007
- Home value: \[tex]$315,000 - Car value: \$[/tex]10,000
- Savings: \[tex]$2,000 The total assets in 2007 are calculated as: \[ \text{Total Assets in 2007} = \text{Home value} + \text{Car value} + \text{Savings} \] \[ \text{Total Assets in 2007} = 315,000 + 10,000 + 2,000 = \$[/tex]327,000 \]

### Assets in 2008
- Home value: \[tex]$325,000 - Car value: \$[/tex]6,000

The total assets in 2008 are calculated as:
[tex]\[ \text{Total Assets in 2008} = \text{Home value} + \text{Car value} \][/tex]
[tex]\[ \text{Total Assets in 2008} = 325,000 + 6,000 = \$331,000 \][/tex]

### Observation on Assets
From 2007 to 2008, the total assets increased from \[tex]$327,000 to \$[/tex]331,000.

### Liabilities in 2007
- Mortgage: \[tex]$265,000 - Car loan: \$[/tex]5,000

The total liabilities in 2007 are calculated as:
[tex]\[ \text{Total Liabilities in 2007} = \text{Mortgage} + \text{Car loan} \][/tex]
[tex]\[ \text{Total Liabilities in 2007} = 265,000 + 5,000 = \$270,000 \][/tex]

### Liabilities in 2008
- Mortgage: \[tex]$240,000 - Car loan: \$[/tex]1,000
- Credit card debt: \[tex]$1,500 The total liabilities in 2008 are calculated as: \[ \text{Total Liabilities in 2008} = \text{Mortgage} + \text{Car loan} + \text{Credit card debt} \] \[ \text{Total Liabilities in 2008} = 240,000 + 1,000 + 1,500 = \$[/tex]242,500 \]

### Observation on Liabilities
From 2007 to 2008, the total liabilities decreased from \[tex]$270,000 to \$[/tex]242,500.

### Conclusion
The proper answer is:
[tex]\[ \text{(d) From 2007 to 2008, assets increased and liabilities decreased.} \][/tex]